Health Insurance Premium Increase

[MarZDoates]

Client sponsors a cafeteria plan under which health insurance premiums are covered. The insurance company raised its rates last year. Employer did not increase the amount of salary reduction to reflect the increase in premium. Therefore, the employee had to pay approximately $1,100 after taxes. Can the employee write a check to the employer for the $1,100 for the increase and still have it considered as "before taxes". (I would think not.)

Should the employer just increase the amount of current salary reduction to cover the amount of the difference for the rest of this year?

[jsb]

Still in same plan year? What type of payroll system does client use? How does client correct other types of payroll errors?

Our payroll system would allow us to correct everything automatically and deal with the taxability issue so that the employee ends up in the same position he would have if no error had been made. If needed, we would advance the employee the amount of the net error and have the employee pay it back over time via payroll deduction. (Time could be 1 pay period, so if our employee is willing to write a check we could just deduct the amount pre-tax in a single lump sum.)

Any reason why your client couldn't do the same? Good luck.